Chile's economy off to disappointing Q4 start

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Tuesday, November 29, 2016

Chile's 5.1% year-on-year growth in retail sales in October was overshadowed by drops of 9.2% in mining production and 6.9% in manufacturing output.

Overall, the country's industrial production indicator fell 7.4% year-on-year, said statistics agency INE. Results came in below market expectations.

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While the raise in retail sales was mainly influenced by a 17.4% increase in car sales, the drop in manufacturing production reflected "a scenario of strong deceleration in the sector," according to the research unit of Spain's BBVA.

Declining mining production, in turn, was attributed by INE to labor strikes and maintenance works at some mining sites, in addition to a fall in mineral grade.

BBVA Research expects next week's economic activity indicator Imacec to come in at 0% growth, which would make it revise its growth for the year, currently at 1.7%.

"Chilean activity data for October was slightly worse than expected and suggests the economy got off to a disappointing start in Q4," said Capital Economics, adding that the weak economic start "strengthens the case for interest rate cuts over the coming months."